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Month: November 2015

I just watched Jon Oliver’s Last Week Tonight https://www.youtube.com/watch?v=Mq785nJ0FXQ on DFS. While I think he is technically right about the fact that these sites have to prance around “is it gambling or skill” I think he is missing the bigger story about the UIGEA.

Using the definition “to lay a bet on something,” of course DFS is gambling. But I think gambling is a vague term. We gamble each and every day of our lives. We assess the risk, and make educated decisions. Sometimes, these things are very safe. We consider the very low risk of getting into a car accident on the 20 minute drive to work, and decide that is acceptable. We convince millions of teenagers that going to college is a good investment. Students can take in hundreds of thousands of unforgivable student loan, in the hope that some day in the future, he or she will have a successful career. This is a massive gamble, that I’m sure does not work out for many people . Pursuing your dream, in many cases, is going to be a huge gamble. But isn’t that our right?

The idea that the government has the basis to decide which gambles we do and don’t take is ridiculous. And the rules aren’t even morally consistent! Gambling is bad. Except in the cases of the lottery and horse racing, which are somehow acceptable?.Statistically, these are much worse than any casino game, because they take out ~27-40% in rake [1]

Oliver quotes a statistic saying 1.2% of people win 91% of the money at DFS. I have not examined that study, but if I had to guess it’s somewhat misleading. Sample size here is tricky to consider, and I imagine a lot of players might just deposit $20 once time and lose it. I imagine it wouldn’t sound so extreme if it were changed people who have played at least 10 times. Also realize, in Draft Kings’s most popular tournament, you can literally turn $20 into a $1,000,000, so people will be losing more often than that.

Oliver also brings up that DFS was only able to get off the ground as a bit of a legal workaround. While that might be true, I’m not sure that is necessarily a strike against it. Isn’t that just how the system works? The UIGEA was passed when it was hastily added onto a bill on port security, which made it close to impossible for politicans to oppose.https://en.wikipedia.org/wiki/SAFE_Port_Act

I think it is a dangerous precedent if the government is allowed to decide which risks we are, and are not, allowed to take. It is surprisingly easy to get your entire life savings trading options in the stock market. And there are definitely traders with advantages similar to DFS players who are doing more research or have opportunities for information or the ability to trade in such volume that casual investors just don’t have. But does that mean people should not be allowed to trade? I could make a similar argument with real estate, it is very easy to buy a home that you cannot afford that may or may not be a good investment.

1. I am not an expert on scratch offs, but I am confident they are designed to make you feel like you are very close to winning, much more often than you are. This is turn will trick many people into playing more than if they had used more honest methods. There are also advertisements for the lottery trying to appeal to the very people who have the least spare income to gamble with! And as an additional kick in the balls, if you are one of the lucky, lucky few, the US can tax you again on the winnings